Hi ,
Just wanting to get some advise on structuring our loan.
We are knocking down a home we are living in and re building a new home on same site. Renovating not an option as quotes can back same as a new build price.
There currently is a LOC loan on the existing house ( to be demolished) with an offest account and equity loans attached.
The offset account has the exact amount of money in it as the LOC loan so we dont have and loan payments.
The equity loans we have not used and there is more than enough money to pull back out from the offset loan and a portion of equity loan to finance the rebuild.
I also have enough cash to finance the re build without using any of the loan money.
I am wanting to maintain the house as fully geared as possible with an offsett account with the funds in it so if we ever move out and rent it , then I can pull the money back out for max tax benefits
I am not sure which way I should finance the new build.
Should I use the money I have in the LOC and offset accounts to finance the new build and then after house complete put my own cash reserves back in the offset while we are living in the house so we dont have loan payments essentially. ( the land value would be enough to satisfy banks to have 20% left in with the current loans while there is an empty block ) OR
Should I use the actual cash to build the new home without using banks money and then get the home re valued after the build? The only problem I can see here is that I dont think the tax advantages would be there if we wanted to draw back out the cash if we perhaps rent it in future.
I hope I have explained this clearly, my objective is to have this house fully geared and have exact same amount of cash sitting in offset account for the occasion we move out and its rented, we would then pull all the money out and park some where else.
The house was rented out initaly for 8 years, then we have shifted in to it.
We have nominated another property as our PPOR.
Hope this makes sense, look forward to your input.
depends on a number of things but you could finance it with a standard product and pay the lower interest and concurrently set up a loc in case you need further funds or increase the existing loan amount. some consideration to loan purpose would need to be given but it sounds like you are across that.
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
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Must admit i read your post and then read it and still was slightly confused.
Why don't you look at 100% funding using a Term Deposit as collateral security and that way you could finance 100% of construction without the need for LMI.
It is hard to comment further without knowing your medium and longer term goals.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
There could be several methods to structure this. One I like is using a discretionary trust. Money can be gifted and borrowed back. Later this loan could be refinanced and 100% deductibility could be maintained if done correctly. In addition tax and asset protection advantages would be possible.
Also make sure you obtain the permission of your mortgagee if knocking down their security property.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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